2007 Minimum Wage Bill Increases Taxes!
The Small Business and Work Opportunity Tax Act of 2007, which was signed into law by President Bush on May 25th, 2007 has major tax increases to offset some tax reductions:

1. Kiddie Tax Increase will affect children up to age 24

The Kiddie Tax  attacks children up to age 24. Starting for the 2008 calendar tax year, any student up to age 24 is stuck paying their higher tax rate of their parents for unearned income. (Non-students get punished until age 18 1/2.)  The purpose of this trick is to punish families for giving income producing investments to their children to take advantage of the children's lower tax rates.
Kiddie Tax IncreaseThis is complicated and careful planning can avoid some of the problems. Call us at (856) 665-2121 for help.

2. Penalty for Questioned Tax Refund Claims

In addition to punishing children and students, the  so-called Small Business and Work Opportunity Tax Act of 2007  also attacks taxpayers taking positions on their tax returns questioned by the IRS. This new 20% penalty ( on top of the other penalties and interest!) is for issues the IRS claims there is no "reasonable basis."

IRS penalty for tax refundsItems that may appear simple or reasonable are now subject to big penalties. Any questionable issues should be reviewed  by your Tax Lawyer prior to filing your tax return.

3. Other Tax Increases

The IRS now has the right to:
  • Levy Employer's accounts without a hearing
  • Charge additional fees for "user-services" such as getting an installment agreement or obtaining required IRS rulings.
  • Charge $25 or 2%, whichever is greater, for bad checks





If you have a question about this law or other tax matters, please call Ronald J. Cappuccio, J.D., LL.M.(Tax) at (856) 665-2121